Entrepreneurs build businesses from the ground up. At some point, the entrepreneur will need to standardize the business procedures to make day to day operations run smoothly. How can an entrepreneur set up the right procedures to run daily operations smoothly?
The most successful startups are run by entrepreneurs who have a great business concept, good organization, smooth operations, good customer relations, and profitability. Simply put, the entrepreneurs excel at the key business processes.
The Value Chain
To determine which activities are most important, the entrepreneur needs to start with the value chain. The value chain creates value for customers and encompasses a variety of business processes, sub process, and support processes.
- Business Processes refer to the key processes in a business. Product design, logistics, and purchases are key business processes for a manufacturer, while project management and evaluation are key business process for a knowledge basis. Marketing, sales, and customer support are common business processes across industries. Some business processes vary by industry, while others span across industries.
- Sub Processes refer to the key activities that contribute to the high-level business process. During the product development process, both design and user testing are key sub processes.
- Support Processes refer to the key activities that do not directly generate value but indirectly relate to processes that do generate value. Personnel management, financial management, and quality assurances are a few examples of support processes.
During the startup phase, the entrepreneur often focuses on the critical business processes. As the business develops, the entrepreneur will often recognize the need to further define and plan additional processes. In the long run, it is essential to continuously improve by making processes more effective and efficient in order to take the business to the next level.
Continuous Business Process Improvement
To improve the business processes, the entrepreneur (1) begins by documenting the business processes and (2) eventually identifies ways to streamline and improve those processes.
- To document the processes, the entrepreneur begins by identifying and mapping out the key business processes. With the higher-level processes outlined, then the entrepreneur can dig deeper into the core processes by describing the contributing sub processes and documenting accordingly. This documentation may be in the form of a check list, a process description, a manual, or a policy.
- To streamline and improve the business processes, the entrepreneur needs to embrace a systematic approach to gain a competitive edge. The Lean Startup method is one systematic approach that incorporates a variety of principles. As an example, the value creation principle allows a business to identify which processes actual create value for the customer and in turn make those processes more effective. For the activities that do not generate value for the customer, the eliminating processes principle suggests outsourcing non-value creating processes.
The documentation of business processes leads to many benefits – monetary savings, effective operations, and the foundation for a long-term growth. The checklists and documentation serve as a platform for growth. It makes it easier to hire and integrate new employees and for the entrepreneur to delegate. It is essential to continue to embrace the entrepreneurial spirit and to continuously find better ways of doing things.
If you would like guidance on documenting and optimizing your business processes, contact us to coordinate your GrowthWheel one-on-one consultation.